Skip to main content

tv   Mad Money  CNBC  May 7, 2012 6:00pm-7:00pm EDT

6:00 pm
and more fast money. meantime don't go anywhere. "mad money" with jim cramer starts now. i'm jim cramer, and welcome to my world. you need to get in the game! >> he's nuts. they're nuts! they know nothing. i always like to say there's a bull market somewhere. >> "mad money." you can't afford to miss it. hey, i'm cramer. welcome to "mad money." welcome to cramerica. i'm just trying to save you a little money. my job is not just to entertain you, but to educate so. call me at 1-800-743-cnbc. all right, why the heck weren't we crushed? why weren't we pulverized? why weren't we just suicidal today? you expect stocks to obliterate,
6:01 pm
right? aren't these stocks negative for stocks? socialists? i mean, come on. aren't they the bat guys if you own stocks? s&p actually rallied .04%. nasdaq climbed .05%. this isn't 2011. where europe could kill us. it's 2012. and things are very different. need you to take a step back, because there is a lot of logic at the level of individual stocks. and sectors. even as the overall market seems to confound people continually. the key to this moment is you just have to recognize what's working and what isn't, and use that prism to go make some money. first off, as i never tire of saying, you have to just negate the prevailing risk on/risk off orthodoxy that's so blinding.
6:02 pm
i can say that, having taken a break from the market for a week and seeing things a lot more clearly than the hour by hour folks who constantly pollute our brains. that's because there is betting going on all over the place. not risky this. no. i just need you to know the tables. right now, there's a bunch of side tables. as much as we remember from 2011 to take our cue from europe, in 2012, the european wheel, the european table, the european dice game is a side table. the smart trade has been to buy weakness caused by europe, not sell it. that's very different from 2011. it's been the same theme over and over again in 2012. there are some other tables. there's a bond table. right now the bond table seems to be a real dumb place to be, although people keep playing it. you get no real return at all.
6:03 pm
to put a dollar into the slots, you're getting back a dollar. that's not a game to me. that's just a recipe for nothingness. i've always told you it never goes out of style. despite warren buffett's attempts to tell you otherwise, the simple fact of the matter is that gold is the best performing asset over the last 11 years. berkshire hathaway is not keeping up with gold, i want to be polite. first there's the commodity table. every bet on that table is a loser. commodities have gotten into a severe downturn. you can't touch them. some of that is the weakness in europe. using less of every commodity because of the severe economic slowdown. now, look, i understand they might provoke a fight against austerity that could lead to growth, germany is still very much in charge, and germany seems to care more about inflation than growth. they're the puppet master and the puppet master is terrible for commodities.
6:04 pm
some of the commodity weaknesses are slowing in latin america. stalled china. seemed to have sleeked the commodity demand in both. most importantly, oil, which is the commodity of, let's just say, the day, has gone from being in short supply to being in glut in just a very few weeks time. the big oil hoarding trade seems to be hurting thanks to a perceived sensation of geopolitical tensions, particularly in iran. gasoline globally just got too darn high for the market to bear. the demand isn't there for $105 crude in the united states. west texas for me. and $120 crude in uniform hence the sharp decline. and it is the commodities table that i say eureka, that explains the stock market. stocks and companies that use oil that use commodities, they're doing fabulously. even last week, a tough week, they're doing fabulously. stocks of kmacompanies that are
6:05 pm
involved directly in the production of commodities, those are the ones that are going down. let's break it down with companies you understand so you can see how foolish it is to talk about things like risk on and risk off. how much more valuable it is to view stocks through the prison. of commodities, as companies that take or pay for commodities, their stocks are going higher. while the companies that would do better if growth were stronger and therefore more commodities were being used, those stocks are going lower. first, all of the packaged good companies are rallying. even the crummy ones, which is always the best way to tell how the market is really doing. i like to look at the worst actors, the companies that have really done poorly. their stocks that are the key, take procter & gamble, this company blew it horrible. it's like a bad play. you should go listen. it has continually gotten downgraded. it was dissed by the oracle of omaha. warren buff wet that fabulous interview where he revealed that he's a seller of the stock. i mean, the guy was nothing but charm and happiness.
6:06 pm
procter, what did it do? eh, doesn't even go down. i mean, it's basically flat to upmost of the day. finished down three cents. despite all that bad mouthing and downgrading. that's because it's a huge user of commodities. now take cummings engine. remarkable quarter. true lay bl-- truly a blowout. it was gorgeous. i was like wow, if i didn't know where the stock was up to, i would say it's got to go higher, right? it's been a one-way ticket down. because people think that cummings goes down when commodities go down. they trade together. in part because the market perceived that the commodities -- they lost a $1.61 today, continuing the brutal decline since the stellar quarter. a bad company rallies and a good company goes down. it's all about the perceived
6:07 pm
impact of weak commodities. we would think that retail would be ugly, right? got that weak unemployment number just last friday. no, retail's doing terrifically. why? because commodity prices are going down. specifically gasoline. hey, tax on the consumer, that's been cut. walmart. could you have a worst set of facts than this walmart situation? a front-page story in "the new york times" about ethical violations scare the heck out of everyone, but when crude dropped to $95, walmart bought them. finished up about 50 cents. you take the weakest stock in any house and analyze it and it tells you exactly what's going on. everything goes through this one prism. everything. restaurants rally on commodity weakness. soft drinks? yeah. going higher. transports. soaring. best tell of all is the housing industry. these companies need commodity costs low because the home builders are giant consumers of commodities. they can build home where is
6:08 pm
there's real demand stocked bay lock of supply and low interest rates. when you get low interest rates and commodities are obtained, their markets go up and that's why their stocks have been great performers, despite what you may hear about the housing situation overall, they continue to work their way higher, as do the banks. wells fargo, u.s. bank, bbnt, these are viewed as housing and terrific places to be. they are anti-commodity. oils? no, not yet. international banks, they're look for growth. international banks, no. tech, tough. but tech needs a strong europe. they do a ton of business there. tech companies that are being used for commodity stocks, too. companies that need stronger growth to win. we don't want them. here's the bottom line. you want to know the prism to understand this market? simply think about whether it needs oil or gas or cotton or copper or aluminum to go higher.
6:09 pm
if it does, that stock is not going to rally any time soon. if it does better when the raw cost goes down, you got a winner. it's as simple as a roulette table where black represents commodity buyers and red represents commodity sellers. the table is fixed right now, people. and black is going to win every time. let's go to steve in pennsylvania, please. steve? >> caller: welcome back boo-ya from huntington, valley! >> good to be back. >> caller: great to have you back. >> thank you very much. >> caller: got a good question for you tonight, jim. the market numbers are weakening over the last week. is it time to take some profits in stocks that are winners, or is the economy just experiencing a hiccup and should cramericans buy dividend payers like eaton pullbacks? >> what's happening -- it's a great question. i was going over there with
6:10 pm
steffi link earlier. i think that when push comes to shove, if you have two thr3.5% yielders, procter is not doing that well, but i want that 3.5 because oil is going down. freeport, making a lot of money. but it doesn't matter, they're a commodity player. eaton is tougher. i feel eaton could go to 43, 42 before it goes to 50. but it's the bad stocks that are doing better, not the good ones. nick michigan. nick? >> caller: boo-ya mr. cramer! >> thank you, nick. what's up? >> caller: well, the sun. i guess. >> i don't know. i'm new in this town. that's an actual line from mo in "the three stooges." i'm quoting mo. that's where i've gotten to. at least i'm not quoting shimp. >> caller: that's true.
6:11 pm
berk tax is up today. i feel they are on their way to becoming a name when we talk about farmers like biogen. how do you see it, especially now that their cystic fibrosis drug is look promising? >> i could not agree measuring my friend. i thought about it and thought about it and thought about it, that maybe i should even lead with this. vertex is so important, because it's the only thing for cystic fibrosis sufferers. you'll be taking this drug, i believe. unfortunately it's a terrible disease. and this drug will be a monopoly. and i think you're right. this is bigger than even the stock up 20. it goes even higher. i hope it comes in so i can recommend it. hot commodity, here's the lens you've got to look at. listen, people, if it needs commodities to go higher, it ain't working. if it needs commodities to go lower, uses a lot, hey, that's what's winning. it's going to stay that way for a while. "mad money" will be right back.
6:12 pm
coming up, insurance premium? shares of aig took a hit today after news the government was winding down its stake in the company. cramer is deciding if this could be opportunity knocking. and later, organic growth. health conscious consumers' desire for fresh food has been fueling growth. sent stock to a new all-time high. should investors still be hungry for shares? cramer's exclusive with the company's ceo is just ahead. plus, bow guard versus new blood. cramer pitting mark zuckerberg versus the legendary oracle of omaha. jim is not here to make friends, but the winner may surprise you. all coming up on "mad money."
6:13 pm
miss out on some "mad money"? text mm to 26221 to get cramer right on your phone. for more info, visit or give us a call at 1-800-743-cnbc. uh, i'm in a timeout because apparently
6:14 pm
riding the dog like it's a small horse is frowned upon in this establishment! luckily though, ya know, i conceal this bad boy underneath my blanket just so i can get on e-trade. check my investment portfolio, research stocks... wait, why are you taking... oh, i see...solitary. just a man and his thoughts. and a smartphone... with an e-trade app. ♪ nobody knows... [ male announcer ] e-trade. investing unleashed. ♪ nobody knows...
6:15 pm
6:16 pm
any time a deal can be put together on a sunday night to sell a gigantic block, a slug of stock, five billion dollars worth from the government no less, like we saw with aig yesterday evening. i stood up and take notice. when the deal was priced at $30.50 and the stock then goes out at $31.84 the next day, pretty much instantly making money for anybody who got a piece of the sunday night deal, then i am all over it and that's exactly what happened with aig, the gigantic insurer today -- i've got to tell you, there are still a ton of reasons why this one is worth buying, even if you missed out like so many others on a secondary that i believe could have been much larger.
6:17 pm
but the government wanted to work and get it done now. with aig, you're getting your hands on maybe the greatest and most improbable turnaround story i've ever seen. three years ago, aig was awarded the state, a financial black hole that needed bailout after bailout to stay afloat. ultimately taking as much as $182 billion in capital infusions and guarantees from the fed and treasury. the insurance company was on life support and nobody thought this thing was ever going to come back. but come back it did. under the phenomenal leadership of the ceo, aig has gone from an overleveraged highly complicated financial company into a leaner slimmed down play on life insurance, property and casualty insurance and mortgage guarantee insurance. stocks have been one of the best performers of 2012. up 37% year to date. i think people are starting to recognize the power of the turnaround. in the last year of the major financials, only wells fargo has outperformed aig. even if you didn't get a piece of the deal -- and like i said,
6:18 pm
this thing came together so quickly, most people didn't -- uncle sam is selling, still giving you a terrific chance to buy a hot stock at a nice discount. aig closed down 99 cents, because while the deal was miraculous, it was still done in the hole. that's not the only reason this big government secondary makes me more confident about the stock i already adored. the treasury department sold $5 billion of its stake and aig was allowed to sell back $2 billion of it. aig brought back 40% of the the total. we know that the federal reserve an aig worked together on the deal and the government was comfortable with aig using its capital by the shares. they wouldn't have allowed that to happen unless they believe aig's balance sheet was strong enough to be able to afford a $2 billion buyback. i think most people didn't know they had that laying around. it matters, because aig is essentially a better balance sheet story. the comeback here is more about the company cleaning up the
6:19 pm
balance sheet and simplifying its business structure. normally i don't like it when companies spepd lots of money buying back stock. i have not talked positively about companies that do that other than a handful. abnet. autozone has done it. but aig is in a unique position. not just because the treasury department owns 63% of the bismz aig is incredibly cheap. by look at the book value. that's the strict accounting valuation of all companies' assets and liabilities. after buying back the latest two billion dollars worth of its own stock from treasury, aig now comes to $58.71, $27 more than the current share price. in other words, aig is trading at a massive 45% discount to its book value, which i believe is understated.
6:20 pm
warren buffett says judge it by the book value. that would be fine if they were bringing out the book value at berkshire hathaway. they're not. aig is. i think the stock still has a lot of room to run. it mean every time the company buys back shares from the company, they're getting a real sweet deal. the company is expected to buy back about $10 billion worth of stock this year alone. i think they do much better. along with $8 billion in 2013. this is a company that knows it's cheap and it's putting its money where its mouth is. by the way, there's been a ton of insider buying here. they only buy because they think the stock is going higher. aig -- i think this was another case for the stock had run up so much going into the quarter that it was going to get a pullback no matter what because the results were good. obviously there's a lot of steklation the government might
6:21 pm
want to sell again. lots of people have been saying the $29 was a sealing for the stock. after this sunday night event, i am telling you, it's a floor. frankly, i don't even care anymore about the government overhang. it remains substantial. i care about the fundamentals. i care about the numbers. they were terrific. given by property and casual insurance, life insurance, and mortgage insurance, aig's management has an imbishs long-term plan, forecasting 10% earning through 2015. it's a growth insurer. 8% increase in investment returns. many investors are skeptical about the company's ability to hit these targets, but given the miraculous turn about, i think we have reason to trust bob's projections. this guy's got kred. he could easily sell three divisions of which i know he has buyers and have enough money to buy all the rest of the government stake right here, right now. so this government overhang
6:22 pm
thing, the deal the treasury department put together to sell $5 million is like saying bye, bye, bye aig. i have never seen anything like it. a deal cut over the weekend for a giant amount of stock that was somehow wildly oversubscribed. that's got the the most impressive sign of real demand i have ever seen. this is the greatest turnaround financial story of our era and now you have a chance to buy it at a discount to where it went out last week. i say go for it. coming up, organic growth. health conscious consumers' desire for fresh feud has been fueling growth for haynes celestia celestial. should investors still be hungry for shares? cramer's exclusive with the company ceo is just ahead.
6:23 pm
6:24 pm
if you made a list of countries from around the world... ...with the best math scores. ...the united states would be on that list. in 25th place. let's raise academic standards across the nation. let's get back to the head of the class. let's solve this.
6:25 pm
dave, i've downloaded a virus. yeah. ♪ dave, where are we on the new laptop? it's so slow! i'm calling dave. [ telephone rings ] [ male announcer ] in a small business, technology is all you. that's why you've got us. at the staples pc savings event, for a limited time get up to $200 off select computers. staples. that was easy. some gourmet snob here, but last week we got definitive food that gourmet food is indeed superior to regular food. packaged food companies are struggling. a kind word for some of these. what are the standouts?
6:26 pm
it's pretty easy. they blew away the numbers. stock up 7.5%. then perhaps even more impressive, because you know we like whole foods, but cramer faith hain celestial, h-a-i-n, the maker of all kinds of natural and organic foods, celestial seasonings, garden of eden chips, greek gods yogurt, it was stunning. i knew about it even though i was away. last thursday, it knocked it out of the play. delivered earnings that were downright amazing. i mean, spectacular. i have been a huge backer of this one for ages and even i was blown away. during this earnings season, it's been a death sentence. we heard they ran up, they're no good. but sometimes the numbers are just that fabulous. and you know what? they can justify colossal moves. this one did not drift down like
6:27 pm
so many others. but that's just not hain's story. the stock ran up into the quarter and it just kept running, rising another 6% the day after imported. now giving 184% gain since i got behind it about two years ago. now more than 23% since the last time we spoke to the ceo. february 2, stock not cheap. 10% growth rate. though i think the growth estimate could end up being way too low. nevertheless, it's the one to pay up for. hain celestial is the undisputed best to play the healthy eating trend that's sweeping not just the nation, but the trend. the company had consistently fabulous execution. management is terrific. the latest results, they're to die for. hain reported record earnings. 31.5% year over year. in the u.s., consumption accelerated.
6:28 pm
when it comes to food, there's no arguing with taste. but sales, we can absolutely quantify. based on the numbers, organic food is crushing everything else. let's talk to the man himself, irwin simon, the banker and founder of hain celestial. find out how he did it. mr. simon, welcome back to "mad money." >> like my jersey? >> well, i like any jersey. >> we've got to give the rangers a little bit of energy and push tonight, so i figured in your honor i would wear my jersey. >> flyers were listless yesterday. >> we're the official snack at madison square garden, so eating healthy at sports events is healthy. >> certainly different from the way it used to be. first, almost all consumer packaged good companies had bad quarters. almost all showed a deceleration of growth. you showed a remarkable consumption increase. does this mean once again that we can put away this notion that it's not a fad? clearly not a fad.
6:29 pm
>> you know, jim, i'm on this show regularly, and thank you for having me on. you're dropping my products. >> actual recognition. >> i've always said eating healthy the not a fad. we've heard one of the best preventions of cancer is preventing obesity. and we keep reading what ingredients pesticides, par bins, we keep hearing about gluten-free products. soup season. it was a warm winter. our soup was up 12% in sales, okay? >> another soup company used the warm winter as an execution. >> our imagine soups, we acquired a company in the u.k., newkovn gardens, our cancels acquisition, fresh soups. baby food. baby rates are down 7% here in the u.s., so we need more babies. and earth's best is up double
6:30 pm
digit numbers. our greek yogurt -- and you hear about some of these big companies having issues with their yogurt business. our greek yogurt business is up over 60%. introduced new dairy-free almond dream yogurt. so we've got a lot of exciting problems. so every time we come back and hear about problems in the food chain, peaks fine. you hate to hear about issues. you hate to hear about all these ingredient issues. and our chicken business, our protein business, hain pure protein, up almost 30%. so the consumer is catching on. >> one of the things yintd like in the conference call and in subsequent research, there's a presumption that this is all for rich people. it can't be. the numbers are too strong. >> eating healthy is not for the 1%, as they say out there. and a perfect example is whole foods has 317 stores and growing their store base, but we sell a
6:31 pm
lot of product at walmart today. we sell a lot of product in kroger. we sell a lot of product in publics, ralphson in southern california. so there's a lot of supermarkets, a lot of mass markets that sell a lot of healthy foods. >> but at the same time, there's a curious mixture here. you've got innovation. and then sleepy time. 20% growth? sleepy time is a sleepy product. >> you come back and you look at sleepy time, it's the number one sku within celestial. i have four kids and they have trouble sleeping at night. but our tea business was up 11%. they come back and say hey, it was a warm winter. tea is not a product you just consume when it's cold out there. it's a soothing product. if you're not feeling well. so there's a lot of growth left in tea. jim, i heard you say we're a pricey stock, we're an expensive stock. come on, we're in early innings. what's happening with all these consumer packaged goods
6:32 pm
companies? why aren't they growing their con consumption? the consumer is not stopping eating. the consumer is moving more and more to healthier products. i've said this many times, whether it's pepsi, coke, craft, the more they get into healthy products, it helps them. bringing awareness is not going to be done just by hain alone. >> there are some acquisition strategies here that i'm not sure of. one of is that you seem to make a lot of acquisitions in europe where we read every day things are bad. second, we have annie's, which you didn't acquire, that's worth s $600 million. why not buy american and not buy europe? >> i'm either very smart or very stupid for not buying annie's, but annie's does a lot of good products. >> your stock is less expensive than annie's. >> you're right. i just think multiples here, as a perfect example of annie's, i think there's some great values in europe.
6:33 pm
great values in the uk. a perfect example is our acquisition of daniel's. we have a great base of products today. 25 hundred products in whole foods today. whether it's our personal care products, whether it's earth's best, whether it's our so i products, whether it's our spectrum, you know, gluten-free -- who heard of gluten-free products four years ago? the growth within gluten-free products is tremendous. the snack business, our sensible portion products. just tremendous. our carrot chip products. so i always say we're in the first period of the hockey game tonight. we've got a lot of goals to score and a lot of opportunities here. and the expansion of our products throughout the u.s., throughout europe, australia, asia right now is just tremendous. so i'm excited for the future. but what i'm excited about also is how we're changing the world, how we're changing the way people eat. what we're doing to help the environment and sustainability. so that is so important.
6:34 pm
and listen, i have four kids. and they are really into eating healthy and they know about it. i know about your daughters being vegetarians. >> yes. >> this is something that's going to continue. >> that's how i got wise to you. because we're huge users of what you produce. huge users of apple. so many things my kids tell me are right. you've been dead right. >> that's how i get wise about things, my kids. >> because they're smarter than we are. >> exactly. they're the future consumers, which is important. >> you know that i -- look, should by more tempered? every time i'm more tempered, the stock goes much higher. thank you, irwin simon. he's the chairman and ceo of hain celestial, the best quarter of this earnings season. i can't believe it. thank you, irwin. good to see you. good luck. >> thank you. coming up, beaugard versus new blood. pitting mark zuckerberg against
6:35 pm
the oracle of omaha. jim is not here to make friends, but the winner may surprise you. later, lost at sea? the dip in crude last year didn't help. tonight, cramer welcomes on the ceo to hear if this company could be headed for calmer waters, or further adrift. all coming up on "mad money."
6:36 pm
high schools in six states enrolled in the national math and science initiative... ...which helped students and teachers get better results in ap courses. together, they raised ap test scores 138%. just imagine our potential... ...if the other states joined them. let's raise our scores. let's invest in our teachers and inspire our students. let's solve this. a living, breathing intelligence helping business, do more business. in here, opportunities are created and protected. gonna need more wool! demand is instantly recognized and securely acted on across the company. around the world. turning a new trend, into a global phenomenon. it's the at&t network --
6:37 pm
securing a world of new opportunities. ♪
6:38 pm
it's time for the lightning round. are you ready? it's time for the lightning round! i'm going to start with daniel in georgia. daniel? >> caller: i'm a student caller from the university of georgia. time warner currentfully the red. >> i want you to own it. i want athens to own it. why? first of all, it's a sub rosa housing, but they continue to deliver good content and i think jeff is doing a great job.
6:39 pm
let's go to lauren in california. >> caller: i'm calling about scholastic course. >> the earnings have been too inconsistent. they go down, they go up huge. i'm going to have to say don't buy. richard in new york. richard! >> caller: hey, boo-yah from the former home of the big bow wow howard beach. >> absolutely. what's up? >> caller: want to know if my stock is going to the pound or should be entered in westminster. cliff's natural resources. >> i like the yield. what can i tell you? it's got a 4.2% yield. i do think people hate commodity stocks, but that one is going to make it. james in florida. james? >> caller: hey, jim. how you doing today? >> real good, james, how about you? >> caller: great, sir. my question is about arm o
6:40 pm
holding. >> i think intel is going to challenge them. i think intel is going to challenge samsung. i am very concerned about arm holdings. let's go to james in new york. >> caller: boo-yah, mr. cramer! what is your take on lsi? >> it's just getting better and better and better. that was a great quarter. the ceo is on fire. i think lsi should be bought. and that, ladies and gentlemen, is the conclusion of the lightning round! >> the lightning surround sponsored by t.d. ameritrade. ke, intuitive, and available to all. distill all that data. make information instinctual, visual. introducing trade architect, td ameritrade's empowering web-based trading platform. take control of your portfolio today. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account.
6:41 pm
but proven technologies allow natural gas producers to supply affordable, cleaner energy, while protecting our environment. across america, these technologies protect air - by monitoring air quality and reducing emissions... ...protect water - through conservation and self-contained recycling systems... ... and protect land - by reducing our footprint and respecting wildlife. america's natural gas... domestic, abundant, clean energy to power our lives... that's smarter power today.
6:42 pm
[ man announcing ], clean what we created here.lives... what we achieved here. what we learned here. and what we pioneered here. all goes here. the one. the accord. smarter thinking from honda.
6:43 pm
nordic american tankers? the best house, but in a tough neighborhood. the tanker business has been in tough shape for years now. to make matters worse, the last week, the price of oil has fallen from $105 a barrel to $93, though the price of crude isn't as important to these companies as the supply and demand for ships. most tanker firms are debt-laiden monstrosities. but nordic american has always been the exception. it's a well-managed company with the cleanest balance sheet in the industry. the dividend yields 9% right now at these levels.
6:44 pm
there's a good case to be made that the company is paying you to wait for a tanker recovery. rates have been slowly but steadily improving. this morning, nordic american tankers reported what many people feel is a weak quarter and there's some serious issues we've got to address. the company posted an 18 cent loss. last year, n.i.t. increased the side of its fleet, that's being considered aggressive, considering the industry is in total disarray. what does concern me here is even when you take out the non-cash clause, nordic american's cash earnings came in at 22 cents a share, eight cents less than the company's 30 cent quarterly dividend. in other words, they're not paying that dividend out of earnings. they're paying it out of capital, i think. that to some is regarded as a red flag. especially when the company recently issued exwi toy raise capital. things seem to be improving, though, but we've got to address these concerns, which is why it is good to have the founder and
6:45 pm
chairman of nordic american tankers here tonight. welcome back to "mad money." >> thank you for inviting me. >> okay. since we talked last, rates have gone up. you don't keep that dividend. you said we must support share hoilders in bad times. when times are good, there's no need to support them. it still is a bad time. >> it is a bad time. but it's good for us because relatively speaking, we are improving our position. when the others have -- we have paid dividends for 59 quarters. and relatively speaking, we are in excellent shape. you must remember, jim, business, there's two things. money into the company and money out of the company. and in this quarter, about $11.5 million or more coming in, and then out. last quarter, it was zero. and the quarter before, it was
6:46 pm
minus. so we are on an upper trend and this could change very quickly and unexpectedly. >> talk about something that may have given you a little bit more of a steady cash flow, this new deal that you announced with exxon. seems pretty important. >> you know, we did a deed last week with exxon mobil, which i happen to believe is one of the best companies in the world. i've been doing business with them for almost 30 years on and off. and we are going to carry a lot of their oil in the atlantic basin and other places. and in this business, cargo is king. >> right. >> and we avoid wasting. this will employ 20 force 30% of our fleet. >> what kind of rate do you think? >> it's market related. >> it so it changes just like day rates. >> we avoight waiting. you can schedule better. we can plan better. and we have even made the first
6:47 pm
contract in that arrangement. we did on friday. >> all right, now, i know you've been good at the dividend, but stock has gone from $31 down to $13. >> yes. >> you're in a tough industry. >> i don't like that the stock has gone down. i own a lot of stock, i can tell you. but on the other hand, i feel very good about this company because we see the dynamics of the world economy. to give you an example, early last year, we expected that 61 max were coming on to the market. the net increase was 36. so if we have an upswing and a stable development of the economy, we will be fine. >> but by your own admission, maybe you're too optimistic. >> well, you know, we have two extremes. the world goes on, it doesn't go
6:48 pm
on. and, of course, i could be optimistic, but then we can be ships inexpensively. we bought a ship last september, $24.5 million. that own paid $8 3 million for the ship three years earlier and there was a debt of $67 million. so it was a distressed situation. >> now, in your report today, you indicate that you'd like to buy three more ships. >> three or four, yes. >> in order to be able to do that, you can't do that without either borough more money or issuing more equity. isn't it better to borrow the money and issue equity? >> it depends how much we would like to load on to our shoulders. but we are in excellent shape financially. we have the strongest balance sheet in the industry. what you are seeing now, the big oil companies, they look at our balance sheet, they look at the
6:49 pm
financial health in order to avoid problem. the value of a cargo is $100 million. when it comes to our company, everything is completely transparent. we've been hanging in there for many years. >> is there any way that if you didn't pay the dividend, in other words, adopt what some people regard as a more prudent strategy, do you think the stock would be higher? >> if it didn't pay dividends, the stock would be lower, in my view. you must remember that the money we pay, that is the money belonging to the shareholders. >> i totally agree with that. >> why couldn't we give the money to the shareholders? this is a question of financial risk. >> right. >> and that is as easy as that. if we can afford to pay dividends, we wish to pay dividends because we regard shareholders as our partners. >> one last question. united states, more in glut in oil than we thought. china, people think is slowing. europe getting slower.
6:50 pm
price of oil has come down. these are got to affect your view of optimism. isn't this a more pessimistic world view, with oil coming down, it means the oil is slower? >> it is very close to your heart and people would like to drive cars. far east is doing reasonably well. not to speak about south america. their route is late bumpy. but that may give us opportunities because the best transactions are often made in a bad market. but we are fine, and this can -- as you said in the introduction, we are paying shareholders to wait. >> i also have to ask the tough questions. >> yes, please do. even tougher. >> all right. thank you very much. that's the chairman and ceo of nordic american, by far the most transparent and the best house, but it is a very tough
6:51 pm
neighborhood. stay with me. thank you. [ male announcer ] introducing a powerful weapon
6:52 pm
in your fight against bugs. ortho home defense max. with a new continuous spray wand. and a fast acting formula. so you can kill bugs inside, and keep bugs out. guaranteed. ortho home defense max.
6:53 pm
6:54 pm
facebook and berkshire hathaway, could there be two companies with less in common? one is run by a young, fast-moving entrepreneur that is filled with ideas that only a true visionary could think of. the older is run by older management that talks a bigger game than it has delivered. i've got to be honest. i'm not coming out here to make this odious comparison. kind of felt i had to. the world of warren buffett -- he's made lots of money. he's made a large number of millionaires. berkshire has had a fabulous run. but right now i think it's worth more dead than alive. that's right, the breakup value of berkshire hathaway far exceeds its current value. without a breakup, which is clearly not in the cards, there's not much hope for the stock to go higher. it has underperformed for a
6:55 pm
decade. it's been crushed by gold during that period. even as management spent the weekend trashing gold as an investment. didn't even think gold was an investment. gold's been up every single year in the last decade. it's also painful to say that facebook should be the stock everyone wants, because it has no earnings and no track record. it's the opposite of the long-term view of buffett. but its growth rate is staggering and management has scratched the surface of all the ways to make money. facebook has become the de facto you with all of your information and pass words and history. the first internet company where you may not have to click on the ads to reward advertisers. 900 million users seem to be glued to the darn thing. facebook will be inherently overvalued from the get-go because of its lack of earnings, but i want you to get in the ipo any waism berkshire hathaway will be inherently undervalued, at least until buffett steps down as ceo. without earnings growth, without a catalyst.
6:56 pm
it can't perform. that said, there are a number of ways that berkshire could change things. it could pay a huge dividends. look at verizon and at&t. it could break itself up. but warren buffett hates both alternatives and is set in the ways of warren attitude. will preclude any type of the growth in this market. supposed to be big acquisitions, shows that he's been out of step for more than a decade. the market loves growth. that's facebook. it hates stagnation. that's berkshire hathaway, which has become basically underperforming and closed. those qualities have nothing to do with stock appreciation. you grow, you bring up value. you pay a dividend. that brings you value. you've got to give us one of those, warren! berkshire, sad to say gives us none.
6:57 pm
the hyundai genesis. in a new, faster-acting formula. s tio-y siin lxtes zemethan a porsche panamera s. the 429 horsepower genesis r-spec. from hyundai. the teacher that comes to mind for me is my high school math teacher, dr. gilmore. i mean he could teach. he was there for us, even if we needed him in college. you could call him, you had his phone number. he was just focused on making sure we were gonna be successful. he would never give up on any of us.
6:58 pm
6:59 pm
with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying... [ all ] i'm with scottrade. seconds away on "kudlow & company," team obama unveils its first ad called go, but the election referendum on the stagnant now economy. we unveil a new investor class poll that shows mitt romney has his work cut out for him. and france elects a spend it all, tax


info Stream Only

Uploaded by TV Archive on